Amazon's original application was filed in Canada on 11 September 1998 as a "Method And System For Placing A Purchase Order Via A Communication Network". It was rejected by the Commissioner of Patents, which gave rise to the Amazon appeal.

Subsequently, the Attorney General and Commissioner of Patents have filed an appeal against this decision.

[1] This is an appeal of a decision by the Commissioner of Patents to deny the Appellant’s patent for a “business method”, having found that it was not patentable subject matter under s. 2 of the Patent Act, R.S.C. 1985, c. P-4 (Patent Act).

[3] At its core, the question is whether a “business method” is patentable under Canadian law. For the reasons which follow, the Court concludes that a “business method” can be patented in appropriate circumstances.

The patent has passed the other main tests. This case is about subject matter:

[9] The Commissioner overturned the Examiner’s finding on obviousness. Although the use of a “cookie” to track information is not new, she found the inventive concept – a simplified “one-step” process in ordering – to be novel and non-obvious.

[14] In what seemed like an aside, the Commissioner made a further comment which would become important in her later analysis, and hotly debated in this appeal. She stated that a claimed invention is not patentable if what makes it new and unobvious comprises non-statutory subject matter. In view of this, a claim cannot rely on a particular group of features which are not new but which together are new and patentable in order to make it so. This conclusion seems to flow from the decision in Schlumberger, where the Federal Court of Appeal found that use of a computer did not make a mathematical formula patentable.

Here's why the patent was rejected, and why the appeal court thinks the rejection was unfounded:

C. Excluded Subject Matter
[18] The third step in the Commissioner’s approach was a consideration of what is excluded either explicitly by the Patent Act or by jurisprudence. She came to the immediate conclusion that business methods have “traditionally” been excluded in Canada based in part on the dissent in Monsanto Canada Inc. v. Schmeiser, 2004 SCC 34 (Schmeiser). There, Arbour J. listed ‘business methods’ as an example of how the Patent Act has been interpreted to exclude certain subject matter from patentability.

Note that Arbour J's opinion was a "dissent" - not the opinion of the court.

[61] There is no basis for the Commissioner’s assumption that there is a “tradition” of excluding business methods from patentability in Canada. The only Canadian jurisprudence cited was made as obiter and in dissent by Arbour J. in Schmeiser.

[78] The absolute lack of authority in Canada for a “business method exclusion” and the questionable interpretation of legal authorities in support of the Commissioner’s approach to assessing subject matters underline the policy driven nature of her decision. It appears as if this was a “test case” by which to assess this policy, rather than an application of the law to the patent at issue.

So, this court's decision doesn't mean the patent is granted, but the patent office was wrong to reject it based on subject matter. The application will now be re-examined to see if it meets the other criteria (obviousness, sufficient disclosure, etc.) but the patent office now has to presume that the subject matter requirement is met.

[79] There may be (and the Court is not suggesting that there are) other reasons why the Commissioner might have rejected this patent. [...]
[...]
[82] [...] The Commissioner’s decision is quashed and is to be sent back for expedited re-examination with the direction that the claims constitute patentable subject matter to be assessed in a manner consistent with these Reasons.

In terms of setting precedent, the approval or rejection of the patent application at this point isn't important. The core issue is that, unfortunately, the Canadian court has ruled that this sort of patents (patents on this category of idea) can be patented.

Further, the Commissioner of Patents already found the application to be "novel and non-obvious", so there isn't much ground left for rejecting the application.

The Commissioner of Patents argued that this category of idea is excluded for reasons X, Y, and Z. The Federal Court disagreed with those reasons. From there, the Federal Court said that this application is within the domain of patentable subject matter.

Is there an error there, in the fact that the Federal Court didn't prove that business methods can be patented? Is it also possible that business methods can't be patented and the only problem is that the Commissioner of Patents didn't make the case well enough?